Microsoft's plan would focus on middle- and low-income housing in the Seattle area, where it's based (Photo by Zach Searcy on Unsplash)

An affordable-housing crisis has hit many big cities in the U.S., but for tech hubs that have experienced rapid expansion, the shortage has hit much harder. In an almost unprecedented move, Microsoft has stepped up to the problem by pledging $500 million toward affordable-housing development in the place it calls home, the Seattle area.

The housing shortage has been a side effect of tech-hub growth from the Bay Area to Brooklyn, where tech companies attract many well-paid workers, who drive up the cost of housing. At the same time, many middle- and low-income workers have seen their income failing to keep pace with the rising cost of living.

The crisis has raised expectations that the tech giants need to get involved in responding to it. “This is a big problem. And it’s a problem that is continuing to get worse," wrote Brad Smith, Microsoft's president, and Amy Hood, its chief financial officer, in a corporate blog post last week. "It requires a multifaceted and sustained effort by the entire region to solve. At Microsoft, we’re committed to doing our part to help kick-start new solutions to this crisis.”

Microsoft plans to lend $225 million of the total to public and private developers to build middle-class housing, $250 million towards low-incom

San Francisco recently passed a bill to tax big employers to help fight homelessness (Photo by Vladimir Kudinov on Unsplash)

e housing, and $25 million in philanthropic grants to local organizations that fight homelessness. As the loans are repaid, Microsoft said it would lend it back out again.

By spreading the money across many projects, the company hopes that the initiative will produce tens of thousands of units. The new housing isn't intended only for Microsoft workers, but for the community at large. "Of course, we have lots of software engineers, but the reality is that a lot of people work for Microsoft. Cafeteria workers, shuttle drivers. It's is a supply problem, a market failure," Microsoft CEO Satya Nadella told a meeting of journalists last week.

Other tech giants have taken different approaches to the problem, sometimes producing intense public-policy debates. Last year, Seattle-based Amazon successfully lobbied against a proposal to tax large businesses to help pay for homeless services and housing, on the grounds that it would put a damper on job creation. But in November, voters in San Francisco approved a similar measure, an initiative supported by CEO Marc Benioff but opposed by Twitter chief Jack Dorsey.

In getting involved in the housing market, Microsoft is stepping in where government has stepped back in recent years, as uban-policy journalist Emily Badger writes in the New York Times:

"...The fact that a tech company has to step in to help ensure the development of affordable housing points to a long-building reality nationwide: The federal government has largely retreated from this role.
The government spent about three times as much on housing programs in the 1970s as it does today, according to the National Low Income Housing Coalition. ...

Over this time, federal resources have increasingly shifted away from subsidizing the construction of affordable housing to subsidizing renters who find housing in the private market. And now most new below-market-rate housing is built not by public agencies, but by nonprofit developers leveraging tax credits."

As Microsoft's Smith and Hood wrote in their blog post: “If we’re going to make progress, we’ll all need to work together as a community. We recognize that Microsoft is in a unique position to put the size of its balance sheet behind this effort. But we believe that every individual and every business, large and small, has a responsibility to contribute."

Rachyl Houterman is a reporting intern at From Day One and attends journalism school at the University of Wisconsin-Eau Claire. In her free time, she enjoys exploring national parks, hiking, and reading